Check out AT&T's FREE camera phonesSchmidt says Google still scratching head over YouTube profits
Google CEO Eric Schmidt likely surprised few by confirming Wednesday that his company's video-sharing powerhouse YouTube isn't quite throwing off lots of cash.
It was obvious from Google's earnings reports that YouTube has yet to generate material income. Still, it's worth noting, 18 months after Google acquired YouTube for $1.65 billion, the company has acknowledged that it hasn't "figured out the perfect solution of how to make money."
"We're working but have not yet in my view gotten a breakthrough around monetization," Schmidt said during an interview for CNBC. "We're working on that. That's our highest priority this year."
Schmidt also indicated that the company is coming out with new modes of advertising.
"We believe the best products are coming out this year," Schmidt said. "They're new products. They're not announced. They're not just putting in-line ads in the things that people are trying...Google believes that advertising itself has value. The ads literally are valuable to consumers. Not just to the advertisers, but the consumers."
Google CEO Eric Schmidt
(Credit: Elinor Mills/CNET News.com)In-line ads are the text ads you see around video players. Google has also experimented with overlay ads that pop up within the video player itself for a few seconds. I wrote last year that I didn't think the ads were too obtrusive. TV networks have used overlays for years to battle TiVo users skipping past commercials. Audiences are already used to them.
Plenty of people disagreed with my assessment of the overlay ads.
But I'm expecting Google to be more aggressive with advertising at YouTube this year. Right now the company is providing a free video-hosting service to hundreds of millions all over the world (more than 10 hours of video is uploaded to YouTube every minute).
Google and YouTube are paying what many believe are millions in bandwidth costs every year. They have every right to be compensated.
I also think the longer Google takes to get users accustomed to some form of advertising, the harder it will be.
there's no hope.
Google has about as much "right to be compensated" as the artists whose stuff ends up there. Perhaps less.
No business has a "right" to compensation. They either have successes, or failures, or something in between. Google search would be a success (a resounding one at that). YouTube has potential, but it's also a legal ticking time-bomb.
Ever tried advertising on YouTube? I have run campaigns which include YouTube and the results are incredibly disappointing.
People go to YouTube to see the latest dancing-dog video, or some politician having a "miss-spoke" moment. The content is all they look at - adverts on the site get very little click-through.
It simply is not an environment which people go to seeking information!
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People go to YouTube to be entertained, they are passive content consumers and so in this situation the only ads that people pay attention to are something they cannot ignore - ie ad spots before the video.
Right now, google wants to monetize ten minute videos. This isn't going to cut it. I made a number of videos for youtube, but in almost every case I found myself unhappy with the ten minute limit. Sure I can splip longer content up into parts, but what I found is that even if you link the first part to the second part, the number of views for the second part nearly always lower than the first.
With Vimeo, on the the other hand, I can release longer format content with better quality. And what's more, I can instantly monetize the content by selling passwords to protected content I uploaded, among other things.
Either way, youtube is waste. With each change they make it becomes less appealing.